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Is conversion rate usually quoted daily, monthly or lifetime?
I got an email last week asking me the following question:
"Some folks insist that “conversion rate” as it’s reported industry wide is #dailypayers/DAUs, while others insist it should be based on monthly payers and MAUs (or longer, if possible). Do you have a preference or sense of which is more correct or widely-used?”
My unhelpful answer is that both groups are wrong. There is no standardisation on conversion rate. (For GAMESbrief’s list of publicly-stated conversion rates, visit http://www.gamesbrief.com/2011/11/conversion-rate/)
When Gabe Newell mentioned that Team Fortress 2 had a 20-30% conversion rate a few years ago, he meant that 20-30% of all people who had ever played the game had spend money on it. Tiny Tower developer Nimblebit quoted the conversion rate based on the first six weeks of its lifetime. Wargaming quotes a 30% conversion rate for World of Tanks and this is probably lifetime, but we just don’t know.
What do the public companies use?
Zynga doesn’t appear to define conversion rate, although it does tell investors that it had a conversion rate of 1.9% in Q2 2014.
King also doesn’t reveal its conversion rates in its filings or its updates to investors, or at least I haven’t found it. In its most recent filing (Q2 2014) it does show the average Monthly Unique Users over the quarter (which eliminates the duplication of, for example, someone playing multiple games such as Candy Crush Saga and Pet Rescue Saga, but doesn’t eliminate someone playing Candy Crush Saga on both Facebook and their phone: that player would be counted twice in the MUU figure.) This suggests that the company has a conversion rate of 3%, across all its games and all its users, on a monthly basis, but averaged over three months. As I give all of those qualifications, I realise that I don’t really understand what this conversion means, and how you can use it as a benchmark. Which is the problem with benchmarking in the first place.
How should you define conversion rates?
There is no right answer for this. Personally, I find monthly conversion rates easiest to use. I can visualise what I need to do, and what value I need to offer, to encourage more players to spend every month. I think that monthly conversion is about converting non-payers into payers.
I can understand why people like using daily conversion. It has a more rapid feedback loop and it can be tweaked and iterated on regularly. I fear that it increases the focus on superfans, though: by focusing on daily conversion you are trying to get committed spenders to spend more often, rather than trying to convert more players into payers. Both strategies have their place, and in the short-term, I suspect that pushing up daily conversion will have a stronger impact on revenue than monthly.
But an endless focus on superfans, without thinking about how to move new players along the curve from freeloader to superfan, may not be the most productive way of building a sustainable, long-term business.
Lifetime conversion is essentially useless as a way of helping you improve your game. I would ignore lifetime benchmarks.
A final warning
As a reminder, benchmarks are not that useful in F2P. I understand that everyone wants to compare themselves to their peers. I also know that for financial analysts trying to udnerstand how well a business is doing, a standardised way of expressing this metric is useful. But for most readers of GAMESbrief, the most important thing is to measure your own conversion rate, however you like, and then try to improve. Don’t get too distracted by what the others are doing.